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Multi-tasking tool

  • Written by Peoples Journal
  • Published in Newsdesk
  • Read: 311

Taxation is not only a tool for government revenue generation.

It can also be an instrument to attain public policy and social goals.

In the sense, tax policy is a double—edge sword for multi-tasking.

For instance, a task hike on unhealthy products is consistent with promoting public health,
safety, and the general welfare.
    
Meanwhile, attacks on dirty fuels can help cut pollution and preserve the environment.

These noble objectives are at the heart of the freshly enacted tax reform package.
    
The Congress has passed a tax reform bill at the heart of President Duterte's economic agenda,
officials said Thursday, raising levies on coal, cars, softdrinks and cosmetic surgeries to finance
the country's crumbling infrastructure.
    
Economists and environmentalists have praised the package, with the Philippines winning a
credit rating upgrade this week from Fitch Ratings and green campaigners hailing the higher tax on
coal.
    
Officials said the tax reforms, the most significant revenue-boosting measure introduced since
Duterte took office last year, would finance increased spending on infrastructure to ease the cost of
doing business.
    
"The tax reform (act) seeks to achieve a simpler, fairer and more efficient tax system
characterised by lower rates and a broader base, to encourage investments, job creation, and poverty
reduction," Finance Sec. Carlos Dominguez said in a statement.
    
The government has warned that bad roads, crowded trains and poor internet speed have hindered
the country's competitiveness and threaten to derail efforts to lift millions out of poverty.
    
The key provisions of the bill, which Duterte is expected to sign later this month, includes a
rise in the excise tax on coal, the fuel that runs almost half the country's power plants.
    
The coal tax would increase to ten-fold or P100  ($1.98) a ton by 2020 according to the
version passed in Congress late Wednesday.
    
The act also significantly raised excise taxes on automobiles, petroleum products including
diesel, gasoline and cooking gas, and jacked up mining levies.
    
The effort to raise revenues also led to a "sweetened beverage tax", an excise tax on
"cosmetic procedures, surgeries and body enhancements", and the doubling of tax rates on dollar
deposits, capital gains tax and stock transactions.
    
The affected sectors have warned of an inflation spike but Congress has described the
legislation as pro-poor for lowering income tax rates and exempting some small businesses from paying
a sales levy.
    
Duterte has vowed to launch a "golden age of infrastructure," with spending of about $170
billion for roads, railways and airports during his six-year term.
    
International credit rating agency Fitch had earlier cited the impending passage of the tax
reforms as one of the reasons behind its decision to upgrade the Philippines' credit rating on Monday.
    
"We estimate the bill to be net revenue positive, reflecting an expansion of the VAT (value-
added tax) base and higher taxes on petroleum products, automobiles and on sugar sweetened beverages,
which would more than offset a lowering of personal income taxes," Fitch said in a statement.
    
Congress this week also passed a P3.767 trillion national budget for 2018, a 12.4-percent
increase from last year.